The Indian government is mulling over issuing a clarification on its foreign direct investment (FDI) rule for e-commerce, according to industry and commerce minister Piyush Goyal, who recently said India would resume talks on a trade deal with the United States once a new trade representative assumes charge there and has stepped up talks to forge balanced trade agreements with other large markets like the European Union (EU) and the United Kingdom.
The statement follows reports that the government could tighten the policy that could force companies like Amazon and Flipkart to restructure their existing marketing tie-ups.India is mulling over issuing a clarification on its foreign direct investment rule for e-commerce, according to industry and commerce minister Piyush Goyal, who said India would resume talks on a trade deal with the US once a new trade representative assumes charge there and has stepped up talks to forge balanced trade agreements with other large markets.#
Despite differences over offers, both India and the United States negotiated a mini deal for months, before the American election purportedly decelerated the process.
In a virtual meeting with EU trade commissioner Valdis Dombrovskis on February 5, Goyal pitched for a quick ‘early-harvest deal’ followed by a time-bound and balanced free trade agreement (FTA), formal negotiations for which have been stuck over differences since 2013, a news agency reported.
He also spoke to UK international trade secretary Liz Truss last week. Both the sides are weighing the prospect of an enhanced trade partnership, which could lead to a broader FTA, the minister said. The EU, including the UK, was India’s largest export destination (as a bloc) last fiscal, with a 17 per cent share in the country’s overall outbound shipments.
Calling on e-tailers having foreign investments to comply with the ‘spirit of the law’, which bars them from offering discounts directly or indirectly, Goyal said the players are supposed to provide only platforms for buyer-seller transactions and not be a part of such transactions themselves.
In December last year, the commerce and industry ministry asked the Reserve Bank of India (RBI) and the Enforcement Directorate (ED) to take ‘necessary action’ on allegations made by the Confederation of All India Traders (CAIT) against Amazon, Flipkart and Walmart relating to alleged FDI rule violations.
The FDI policy also disallows such online marketplaces from selling products of the companies where they hold stakes or control inventory, and also bars exclusive marketing arrangements, among others.
Goyal said the government is focusing on about two dozen champion sectors through interventions, including production-linked incentives schemes, phased-manufacturing programme, tariff rationalisation and logistics support.
This will result in incremental manufacturing output of ₹20 lakh crore a year, he added. The sectors include pharma, textiles, auto components, aerospace and defence.
Similarly, to ensure consumers have access to quality products and low-grade imports are curbed, the government has developed technical standards for 185 products, imports of which stand at $57 billion a year. Goyal highlighted the government’s resolve to raise the number of products for which technical regulations will be in place.
The minister exuded confidence that the growth in exports in January will continue in the coming months. Signalling a nascent recovery, merchandise exports in January grew 5.4 per cent from a year before, the highest since September 2020 and compared with a 0.1 per cent rise in December
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